The combined defined benefit (DB) funding level increased to 97.7% at the end of September, according to the Pension Protection Fund's (PPF) latest update.
This was an increase of 1.6 percentage points from 96.1% at the end of August, and the highest level recorded since June 2011, when it was 98.2%.
The combined DB deficit decreased by £26.6bn over September to £38.7bn on a section 179 basis, a fall of 41% from the end of August for the 5,588 schemes in the lifeboat fund's index.
Over the month, aggregate liabilities were recorded at £1.7trn, a decrease of 2.3% over the month, while assets amounted to £1.6trn, a small decrease of 0.8%.
Overall, there were 3,437 schemes in deficit and 2,151 schemes in surplus, moving from 3,562 and 2,026 schemes respectively in August.
The PPF said the improvement in schemes' funding position was largely caused by an increase in bond yields over the month which decreased scheme liability values, offset to an extent by an overall decrease in asset values due to a decrease in bond prices.
Over the month, conventional 10-, 15- and 20-year gilt yields rose by 15 basis points (bps), 14bps and 14bps respectively, while index-linked 5-to-15-year gilt yields rose by 9bps.
Over the year, the FTSE All-Share Index grew by 1.1%, while the FTSE All-World Index increased by 7.6%, both aiding an increase in scheme assets.
Blackrock head of UK strategic clients Andy Tunningley said that with September marking a decade since the collapse of Lehman Brothers, attention had naturally turned to how schemes have fared. While continued positive equity markets have helped keep funding levels high, he said, it is still only 0.8% above where funding levels were in January and schemes should not become complacent.
"With traditional assets feeling the squeeze, schemes should be looking elsewhere to gain access to the characteristics they are seeking and private markets are one such area," he said. "Above all, what is more apparent this year as markets have become more volatile, is the need for trustees to take responsibility for the resilience of their schemes and have a holistic strategy in place."
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